| Frank KristanHouston Natural Resources Corp. | |
Great. Good morning, [ph] Anna 00:00:34 and thank you for having me. I appreciate it and we'll look forward to discussing the company this morning. And I appreciate the Emerging Growth Company having us and presenting here today.
And so we're – we are a global natural resources company that we're looking at, focusing on building a portfolio of investments in energy companies. And so on our now summary, we do own at the moment three investments in energy companies. The first one is Houston Natural Resources Inc., that has about 2,800 acres located in Crockett County, Texas. Its oil wells, about 83 oil wells that are able to be worked over with an estimated 33 million barrels of oil, an appraised reserves of $69 million.
HNRI also owns HNR oil services company, which is specializing in recycling and remediation of oil produced contaminants from the – from the drilling sites. It has – it owns and operates our reclamation plant, which is located in south Texas.
HNRI is also through HNRC sponsors LLC HNRAC Sponsors LLC, a sponsor of a special purpose acquisition Corp. called HNR Acquisition Corp. that listed on the New York Stock Exchange symbol is HNRA. And that had $86,250,000 available for a business combination that listed in February of last year and has made an announcement that it is going to be going and doing a business combination with Pogo Resources. And so, that is expected to be at the moment they're looking for – since expect to be completed later this quarter. So that's the first investment that we have in the energy space.
The second one is we've acquired a 9.9% interest in Cunningham Energy, which is a West Virginia-based independent oil and gas company. We do have a pending letter of intent to acquire the additional up to 90.1% interest in Cunningham Energy. It's an interesting operation in that it's got an engineering report with independent appraisal of – as of December 31, 2022, 2022 of $352 million, assuming that the 40 well program is completed. And so the company is working with Cunningham Energy to complete that acquisition and get financing for the drilling program to be implemented.
The third opportunity – the third investment is we've required a 40% interest in third investment is we required a 40% interest in Rhino Energy Pty. Ltd. Rhino Energy is a – an Australian company, but it has a focus on oil and gas developments in North America and already has investments in North America or in Calgary and in Canada. And so, those three, what we've – what we're doing at the moment is each of those operates their own management team. And so, we oversee those investments.
And we're looking to consolidate as part of the strategy [audio gap] 00:04:37 regarding some [indiscernible] 00:04:37 some non-controlling interest. But we're focused on the management teams and helping them implement their business plans. And so, that's basically an outline of what we're looking to do or what we have done to-date and the business model of what we're looking to do.
The opportunity we see is, in this particular industry, the large oil and gas companies, including Exxon and Royal Dutch Shell and Chevron and BP, are currently selling a combined of more than $100 billion in oil and gas assets around the world as they'd focus on more top performing regions, and that was from a news analyst from Rystad.
And the opportunity there is as they divest of those, we see that as an opportunity to be acquiring them and building up a portfolio of those investments, both control and non-control. In each of those deals, we're looking to maintain the management team so, too, who's been able to identify additional acquisitions, and that's where we've been able to find those from a network of brokers, a management team, and have been able to identify potential acquisitions in the oil and gas industry and the oil and gas services industry. We've also been looking at opportunities in the oil services sector, as well as the wastewater treatment sector in the energy services space. We believe that the management that we've got in place in each of those provides us, you know, a good team to be able to implement the business strategy.
And the opportunity in Cunningham Energy is that they've got 30,000 net acres, and they've got at least, you know, sponsored drilling programs on 40 wells. They are currently producing on a small number of wells at the moment. And so we've seen that plus the 86 wells opportunity and half oil field for the workovers and production capabilities of those existing wells. And we're working with them to get the capital to rework those wells as well as the drilling program required for Cunningham Energy.
The other situation Cunningham Energy is sponsoring a CE acquisition [indiscernible] 00:07:30 which is a pending SPAC, special purpose acquisition co. That's AUD 100 million focused on a business combination in the energy industry. We have been working on the sponsor capital for that program as well.
The other opportunity we see with Rhino Energy is that they're looking at making acquisitions and further investments in North America and in Canada. And we see some operations in Canada, and we've been looking at opportunities in Canada or one of the opportunities coming our energy as is it on around 900,000 acres in Qubec province in Canada that it's got to work out agreement on.
And so, we're looking at those opportunities in Canada, both on the east and west coast of Canada. And so through Cunningham Energy, we're also looking at some other international opportunities in South America as well. And so, we're excited about that acquisition getting completed and getting the capital to further develop and get better returns from the investment.
And so, that's where we see the opportunity. We believe in the big picture with the opportunity over the next few years in the energy industry. We're a bit contrarian like that. We are focused on some of the ESG applications of it, but we see an opportunity over the next few years in the energy space. And that's why we're looking to build this portfolio of energy – of energy companies.
The oil fields operations. On that slide, you'll see where they're located in West Virginia. And, you know, we've got the 9.9% currently, the interest. It's noteworthy for several reasons. It's got diverse operating areas in the US, West Virginia, Kentucky and Ohio. The map doesn't show the opportunities that we've got in Canada as well. We got a – an existing production with a high growth potential. Cunningham Energy was the first to develop shallow horizontal drilling and – in the basin with oil focus with the verified increases of 60% to 80% over vertical shale or oil well drilling.
By combining the E&P and the oil field services, which is what we're looking to do in terms of making a vertically-integrated oil, oil company, it will lower the costs and increase the control over the – of the vertically integrating process.
And there is 30,000 net acres in West Virginia and over, another 20,000 additional acres potentially in West Virginia, Ohio and Kentucky. And they've also found proven shallow oil opportunities in the Appalachian Basin: Cow Run, Big Injun, Weir Sandstone, Berea sand (sic) Berea sandstone, Clinton sandstone and Devonian shell – shale, I should say, and have found a large growth potential in the Big Injun sandstone with potentially 75 to 100 other potential well sites on our existing leases.
The oil field operations in the Halff oil field is in Halff, and the slide shows the location in Crockett County and in the Permian Basin where the Halff oil field is located, with the Permian Basin being the most prolific oil area in the US, an existing oil field with proven reserves and 83 wells to be reworked the Permian Basin being the most prolific oil area in the US, an existing oil field with proven reserves and 83 wells to be reworked. It has a prolific oil sign called the San Andreas formation, that has not been exploited at the present time. This producing reservoir is in the Grayburg Sand of the Permian age. The half oilfield has produced about 3.9 million barrels of oil to-date from that Grayburg Sand. The original in place on the Grayburg Sand is calculated to be 36 million, 36.9 million barrels of oil.
The zone has been producing oil for over 50 years, including the half oilfield, and continue to be a productive area for at least another 20 years. Again, we've had independent valuations done of the potential there, and it's approximately $69 million based on oil at $60 a barrel conservatively. And it's been the same with our valuations, have been conservatively using the current oil prices and gas prices.
Then the HNR oil services is a wholly-owned subsidiary of HNR natural resource, the Houston Natural Resources, Inc. It collects fluids from third-party operators, and displays – disposes of the fluids in the company-owned disposable disposal wells, the saltwater disposal units. And ultimately, they're remediating the oilfield, waste solids at its treatment facility in Texas, and is designed specifically for maximum environmental protection for the oil producer, and exceeds all state and federal regulatory requirements. And that would generate multiple streams of revenue for HNR role services that it gets revenue from the water treatment in addition to revenue from the when they separate the oil from the water and they got additional sales from the oil spill this facility is will eliminate antiquated disposal methods of harmful drilling byproducts and contributed to producer.
Producer profits eliminate potential liability costs associated with environmental pollutions. And it's comparable to other it's a journal. To this endeavor is significant and offers immediate stockholders value with what we're doing. So that is an outline of some of the actual oil field operations that we have currently in place.
And then the next slide, we're moving onto the management team. We believe that we've got a highly qualified and experienced team of business experts engineers geologists geophysicists scientists and accountants. Collectively they're contributing their many decades to professional and practical experience collectively for the benefit of HNRC and its shareholders.
That is my background on the slide. I'm originally from Australia and I've been here about 30 years 35 years. And my background, it was based in New York for a number of years and then in Maine and then in Virginia. And so it's a it's been the experience of building successful companies of which we've had had some in the past and in the operations that we've done. And we look forward to implementing that business plan in the energy sector and that business model of getting, of getting a portfolio companies in the energy industry, as we have done in some of the other industries.
Ryan Cunningham is President of Cunningham Energy. His background he's got more than 30 years of oil and gas and finance. He's currently in charge of Cunningham Energy and Mars Corp oil and gas, which is the company that is operating the Quebec-based Canadian operation. Viper Capital Partners helped raise capital for, for drilling and Raven Ridge Energy its history is, they've been extensive in that industry in West Virginia and is created an independent oil and gas production firm and a very good experience.
The management team for Houston Natural Resources is outlined. And Donald Goree, Donald Orr and David Elks, who are the management team running Houston Natural Resources. They've got more than 35 years in David's case and in Donald's case more than 40 years experience in the, in the energy industry. The management team for Rhino Energy is Thomas Fontaine, David Whitby and Gregor Mahwinney and Michael Mason and each of those have got more than 30 years to 35 years of experience both domestically and internationally. And so, we'll be relying on them for their extensive experience in identifying additional acquisitions as well as building as they have in the past, building companies from, you know, $1 million of revenue to $600 million in revenue. And looking to build a company that can go to 25,000 barrels a day is what we're looking to build through Rhino Energy.
And that outlines the management part of the presentation. The last slide showing the financials for the last two years as to what the assets and the investments – the investment in – it will allow diversified holdings, investment in Houston Natural Resources – excuse me, in Cunningham Energy.
The investment in Rhino Energy was made in the last quarter, so that will be in the next filings for the investment in Rhino Energy PTY. The investment in Worldwide Diversified Holdings is being spun out as part of a dividend process as for shareholders. And then the balance, so we've got total liabilities – sorry – we got, you know, stockholders' equity of approximately $91 million. So, it's been shown over a dollar – nearly a $1.50 in shareholders' equity on the – from the stock price. And the 12 months for December 31 is the income that we had for compared to the previous year. And we're still showing a profit before tax of EBITDA of $9.6 million. And while that revenue has been coming from advisory services, we've been providing to the portfolio of companies on the Worldwide Diversified as well as to the other portfolio of companies.
And so, that basically is the summary of Houston Natural Resources and what we're looking to do and build here over the next few years. And so, [ph] Anna 00:20:32, I think that is where we are with respect to the summary of the company and its operations and would be welcome to open up for questions.